California Budget Talks Stall Amid Reform Proposals

By Juliet Williams | July 6, 2009 | 5:49 PM EDT

Sacramento, Calif. (AP) - Attempts to close California's widening budget deficit appeared to veer off course Monday after one of the key Democratic leaders sat out a top-level meeting amid frustration over the direction of the talks.

Assembly Speaker Karen Bass, D-Los Angeles, refused to participate in morning negotiations between Gov. Arnold Schwarzenegger and the Republican and Democratic leaders of the Assembly and Senate. She told reporters that she would consider avoiding another so-called Big 5 meeting later Monday.

Bass criticized Schwarzenegger for fixating on what she called a "laundry list" of issues that would do little if anything to close the state's $26.3 billion shortfall. She demanded that the Republican governor and the other leaders focus on closing the deficit, rather than what she considers peripheral issues.

She said the chasm between Democrats and Republicans over addressing the state's fiscal crisis seemed to be growing.

"We need to be talking about closing the deficit," Bass said during a news conference called just 30 minutes before the governor was scheduled to address reporters.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, will continue attending the budget talks because he believes some progress is being made, said his spokeswoman, Alicia Trost.

Failure to find a quick resolution will leave thousands of state vendors in limbo. Last week, the state began issuing IOUs for all types of services provided by private contractors, including community health clinics, suppliers and janitorial crews.

Schwarzenegger also ordered some 235,000 state workers to take a third furlough day a month, cutting their pay by a total of 14 percent.

Monday's developments come after futile talks over the holiday weekend and after Republicans in the state Senate blocked a proposal last week to cut $3 billion in spending before the July 1 start of the fiscal year. That action widened the deficit by about $2 billion, in large part because more money will now flow to schools under California's complex education-funding formula.

Schwarzenegger and GOP senators said the Democratic majority in both houses of the Legislature needed to deal with the entire deficit at once rather than in piecemeal fashion.

At the same time, the governor is pushing for reforms he says will save California hundreds of millions of dollars a year and show taxpayers that state government is accountable for how it spends their money.

He met Monday with district attorneys from five counties to discuss alleged fraud in the in-home supportive services program, which provides care for people with medical problems.

He said he wants caregivers and patients to be fingerprinted as a way to prevent fraud and institute unannounced compliance checks at recipients' homes.

"The legislators upstairs, some of them, are very reluctant to do that. They feel that it would be an insult to fingerprint a patient," Schwarzenegger said during his own news conference. "I always tell them that fingerprinting is quite common in a lot of different areas."

Schwarzenegger spokesman Aaron McLear said the governor is asking for reforms to four state programs: in-home care, pensions for new public employees, Medi-Cal and CalWorks, the low-cost health insurance program for the poor.

McLear said the other legislative leaders would continue working toward a compromise on the budget deficit, with or without Bass. Schwarzenegger declined to criticize the Assembly speaker, instead calling Bass a passionate public servant.

"These are very challenging times, so I understand if people sometimes get frustrated and they get upset," he said.

Attempts to close California's widening budget deficit appeared to veer off course Monday after one of the key Democratic leaders sat out a top-level meeting amid frustration over the direction of the talks.